AICPA Survey: CPAs More Upbeat on US Economic Growth Outlook

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CPAs are the most upbeat on the outlook of the U.S. economy than at any other time in the latest survey by the American Institute of CPAs (AICPA).

The CPA Outlook Index (CPAOI) rose to record 79 in the fourth quarter, from 77 in the third quarter. Prior to that, the index’s last record high was 78, set in the fourth quarter of 2014. The measure is what the AICPA says is a broad-based indicator of the strength of U.S. business activity and economic direction that reflects the views of CPAs who are AICPA members in Business & Industry holding executive positions in both public and privately-owned organizations of all sizes, and across a broad spectrum of industries.

 “In addition to expectations for business tax reductions, executives cited several factors for the boost in optimism, including rising consumer demand, a strengthening global economy and the perception of more pro-business policies at home,” said Arleen R. Thomas, managing director of Americas Market, Global Offerings & CGMA Exam, Management Accounting for the Association of International Certified Professional Accountants, in a prepared statement.

On the other hand, she noted that “some respondents expressed concern about political dysfunction and fallout from potential stock market and real estate bubbles.” The survey indicates that some economists predict downturns.

The AICPA makes special mention that the survey information gathering was done prior to the recent passage of the Senate’s tax bill and doesn’t reflect any influence by that.

Graphic via AICPA

Still, the majority (74 percent) of executives who said they were optimistic about the economy increased 10 points from the third quarter, and 70 percent were upbeat about their own companies’ business outlook — also a post-recession high.

The CPA Outlook Index measures nine economic indicators: U.S. and organizational optimism, business expansion, revenues, profits, employment, information technology spending, other capital spending, and training and development.

Measurements of each of the nine indicators are calculated by taking the percentage of respondents who say that their expectation is positive or increasing, and adding to that half of the percentage of respondents who have a neutral or no-change response.

Here’s a snapshot of other survey findings:

Companies planning to expand rose to 71 percent, the same level seen in the fourth quarter of 2014.

Roughly a quarter (27 percent) worry about inflation while 5 percent are concerned about deflation.

Labor expenses continue to be a key concern for 41 percent of the respondents.

Interest rates are a concern for 21 percent of respondents.

Revenues are expected to increase at a rate of 4.8 percent; profits at 3.8 percent.

Respondents expect to increase spending by 3.5 percent for information technology over the next year.

Health care is expected to cost more than other expenses.

Spending for training and development only rose a point to 2.2 percent, expected marketing expenses rose from 1.8 percent to 2 percent, and 2 percent was allocated for research and development.

About half (52 percent) of the companies said they have the right number of employees while 8 percent said they have too many. Slightly more than a third (38 percent) reported having too few. Only 13 percent of respondents said they hesitate to hire, and the AICPA reports that is the lowest percentage since the organization began polling staffing needs in the first quarter of 2010.

The following is the AICPA’s list of ‘Top Challenges Facing Organizations’ for the fourth quarter of 2017 versus the year-earlier period:

  1. Availability of skilled employees: Number 4 in the fourth quarter of 2016.
  2. Domestic competition: Number 5 in 2016.
  3. Regulatory requirements and changes: Number 1 in 2016.
  4. Employee and benefit costs: Number 2 in 2016.
  5. Developing new products, service, markets: Number 6 in 2016.
  6. Domestic economic conditions: Number 3 in 2016.
  7. Changing customer preferences: Number 8 in 2016.
  8. Domestic political leadership: Number 7 in 2016.
  9. Staff turnover: Number 10 in 2016.
  10. Materials, supplies, equipment costs: No Top 10 ranking in 2016.

One special note is for Stagnant and reclining markets, which ranked No. 9 in 2016 but had no Top 10 ranking in the fourth quarter of 2017.

The survey is based on responses from 800 CPAs who are in top positions in their companies, such as chief financial officer or controller. The survey was conducted Nov. 1-28.

About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.


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